ALEX BRUMMER: Brussels-Frankfurt resentment of the City of London's rise is permanent – leave or remain

The Brexit vote was always going to be disruptive for financial markets so we should not be too surprised by the rally in the pound, FTSE 100 and overseas bonds markets as the latest polls show ‘Remain’ edging back into winning territory.

We should never forget, however, that over the medium to long term a lower value for sterling is helpful to UK exporters and at a time of weak commodity prices does not represent a threat of imported inflation.

To the contrary – breaking the cycle of Japanese-style near-deflation might be positive.

Distrust of Anglo-Saxon capitalism on the Continent is a powerful force and there is deep resentment of the City's rise to be the world's most important centre for foreign exchange and related derivatives trades and clearing

Paradoxically, the dangers of staying in are thrown up by a reported German threat to grab back clearing of euro-denominated foreign exchange trades if Britain seeks a divorce from Brussels. It was a challenge by the Chancellor George Osborne and the Treasury to the European Court of Justice which allowed London to retain this trade after Brussels sought to expunge it.

The distrust of Anglo-Saxon capitalism on the Continent is a powerful force and there is deep resentment of the City’s rise and rise to be the world’s most important centre for foreign exchange and related derivatives trades and clearing.

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Just how little influence Britain has in seeking to preserve the Square Mile’s laissez-faire approach to finance, in the face of a 19-nation eurozone juggernaut, is illustrated by two other post-crisis reforms challenged by Britain.

The Treasury opposed the bonus cap on bankers – of two times basic pay – because of its distorting impact.

It raises the fixed costs and capital requirements of banking, makes remuneration less flexible and puts Europe’s financial centres at a disadvantage to New York, Singapore et al.

Similarly, the embryonic transactions tax, from which we are excluded for the moment, would hit London harder than any other centre.

The lesson is that despite all the rhetoric, our own authorities, the Treasury and the Bank, have found that being inside the tent does not protect the City of London from mischief.

Market-led uncertainty comes and goes. But Brussels-Frankfurt resentment of London’s hegemony in forex, cash share transactions, banking, hedge funds and all the rest is permanent – leave or remain.

Goldman stain

Investment banks operate in a highly competitive environment and colleagues often compete with each other for business and bonuses, let alone Wall Street and City rivals.

January 1 is ground zero for bankers, the day that they are reminded by higher authority that they have ‘nil’ business credited to their name.

It is this hothouse atmosphere which leads senior bankers to push the envelope. It is the background to Guy Hand’s losing fight with Citi over its advice on EMI. It explains the behaviour of the ‘London Whale’ and subsequent cover up at JP Morgan and much else.

Now Goldman Sachs is back in the firing line. The bank colourfully has featured in the media because of the enthusiasm of employee Youssef Kabbaj’s heroic efforts to make the Libyan Investment Authority a client, allegedly procuring two prostitutes to further the case.

GS’s role in a big fund raising for a Malaysian fund linked to corruption also has come under scrutiny.

None of this is new. Back in the boom years of UK takeovers Goldman found itself backing a private equity consortium bidding for ITV and at the same time acting as corporate broker to BSkyB.

At the peak of the financial crisis it created the infamous Abacus bond betting against sub-prime mortgages, while selling the security off to naïve buyers including RBS.

Over the years this paper has been reassured that such behaviour is a thing of the past and staff have been reminded that clients’ interests always come first and its strongest asset are its people and its reputation.

In some respects the latter is all the more important when its former operatives Mario Draghi at the European Central Bank, Mark Carney at the Bank of England and Bill Dudley at the New York Fed hold such powerful positions.

It looks as if however hard Goldman seeks to neutralise over-exuberance, it comes back. In the UK its work for BHS/Arcadia and the relationship between Sir Philip Green and Michael Sherwood has come under scrutiny.

One of the remarkable things about this is that chairman Lloyd Blankfein managed to hold onto office through the financial crisis and turmoil, holding board meetings from his hospital suite when undergoing treatment after a health scare.

Maybe it is time for Goldman’s independent shareholders to take a leaf out the governance rulebook and look for a strong outsider to enforce the cultural change.

Glugging switch

AS A long-standing fan of Majestic Wines I have to say I find its new catalogues, filled with special offers of six indifferent bottles, immensely irritating.

There is less choice, fewer vintage offerings and emphasis on cheap and cheerful. But it seems to be working for boss Rowan Gormley, an expensive £7.3million import from Naked Wines, who has delivered an underlying sales rise of 4.8 per cent and 11 per cent more active customers.

A focus on more English wine and craft beer is helping make the difference. Change can be disconcerting, but necessary.